Table of Contents
Introduction
How to Select a Consultant
Can You Readily Define the Purposes of and the Skills Required for the Assessment?
- Specific Purposes of Investigation
- Matching the Skill Sets
- Variety and Depth of Skills
- In-house Capabilities
- Knowledge and Capability
- Special Skills Needed
- National vs. Regional Firm
What Consultant Information is Available?
Conclusion
Introduction
For even the most highly experienced real estate professional, whether an asset or corporate real estate manager or officer, inside or outside counsel, broker or other real estate representative, selecting and effectively using an environmental consultant can be one of the most difficult "management" issues which the professional faces in a transaction. As transactional due diligence, and particularly environmental due diligence, has become more time sensitive, the pressures to quickly and accurately assess the environmental condition of a property or portfolio have increased. Moreover, the scope of environmental due diligence has been substantially expanded over time. Real estate professionals, and in particular lawyers, are now regularly expected to handle environmental issues relating to air, water and soil even though these media may be governed by entirely separate and distinct sets of federal, state and local laws and regulations. In addition, transactional documents routinely include broad and complex representations, warranties, covenants, indemnities and other liability allocation provisions. Because of the expanded scope of due diligence and the increased complexity of transactional provisions, it is more critical than ever to have complete, professional reports which provide meaningful, plain language conclusions as to the condition of the property and which identify all items posing risk to human health and the environment.
Even today, there is no "tried and true" way to select and use an environmental consultant. Many fields intersect. The expertise needed may involve geology, hydrogeology, chemical engineering, botany, biology, industrial hygiene or other disciplines. Moreover, there is no national licensing program for environmental consultants, nor do most states have licensing requirements for environmental consultants. Typically, environmental consultants are only required to be licensed for asbestos abatement, lead paint removal, underground storage tank work or, as a "certified" or "licensed" professional, if a state "brownfield" program is being utilized. In some states, environmental professionals have organized to establish self-regulatory base line requirements. However, these requirements often conflict and there is no assurance that an environmental consultant approved by a particular self-regulatory organization will be competent to perform the work required. Before preparing or issuing a request for qualifications or a request for proposal (hereinafter referred collectively as a "request for proposal"), several important initial questions need to be answered.
Can You Readily Define the Purposes of and the Skills Required for the Assessment?
A number of factors need to be analyzed in order to answer this question.
Specific Purposes of Investigation
In order to define the need for environmental assessment, the real estate professional should assist the client in identifying the specific purposes of the assessment. Why is an assessment needed? Is the due diligence for development of an owned property or properties, purchase of a property or properties owned by the seller or joint venturer, for an acquisition or a development project, or for a securitized or conventional permanent loan on an existing property? For whom is the assessment being performed - purchaser, seller, lender, developer, joint venturer, or some or all of these parties? What is the general scope of the assessment - specific or all hazardous waste or substances, wetlands, endangered species, soil, water and air?
Matching the Skill Sets
Matching the skills of a consultant with the purposes of the assessment is one of the most critical aspects of the selection process. With a clear understanding of the specific purposes of the assessment, consultants can be surveyed as to the range of services they can provide, their in-house support facilities and resources, regulatory experience, and their staff experience and certifications. To make sure the consulting firm ultimately selected is able to address the concerns which may arise, it is often advisable to select a firm which offers a wide range of environmental services. In addition to direct experience with the typical phased environmental assessment process, it is often important for the firm to have experience in areas such as asbestos assessments, geological studies, soil and groundwater surveys, industrial hygiene, underground storage tank evaluations, air quality assessments, hazardous materials management, regulatory compliance consulting, and environmental permitting and licensing.
Just as it is important for a consulting firm to have a variety of technical capabilities, it is equally important that it employs a staff having a sufficient variety and depth of technical skills. Professionals who may be necessary for the assessment team include environmental engineers and scientists, mechanical and electrical engineers, geologists and geotechnical specialists, analytical chemists, asbestos specialists, industrial hygienists and architects. The consulting firm should employ an adequate staff of licensed or certified professionals, such as professional engineers, certified industrial hygienists and registered architects/engineers, to monitor projects and provide quality control.
The cost of an assessment can often be lowered if the consulting firm provides in-house support services, such as information resources and field testing equipment. These resources will keep subcontracting costs to a minimum, and are likely to make the assessment process more efficient. It is often helpful to have a consultant with an in-house laboratory which is certified for analysis of environmental, hazardous waste, industrial hygiene and asbestos samples. It is also useful if the consultant owns equipment for water and groundwater sampling, air quality monitoring, and hazardous material sampling. Finally, for more significant assessments, it may be important for the consultant to have capabilities in such areas as computer-aided drafting and design, geographic information systems and other specialized software for environmental modeling and data management.
The consulting firm must have a thorough knowledge of the environmental regulations which drive the environmental assessment process. A firm should be not be selected unless it is thoroughly familiar with federal, state and local regulations, including reporting requirements for certain kinds of environmental hazards. It will usually be important for the consultant to have an established track record in regulatory compliance consulting, and familiarity with regulatory agencies and personnel. The credibility of the consulting firm in the view of the applicable regulatory agency is often as important to the success of an assessment as the quality of the assessment itself.
As a part of defining the need for an assessment, it may be important to select a consultant with a particular strength. Is the media affected air, water or soil? Does the consultant have a particular strength in each of the media affected? Will the property or project involve a voluntary action and therefore require a consulting firm which has on its staff a "certified professional" or "licensed site professional"? If so, what is the credibility of that consulting firm in the eyes of the regulatory agency which licenses the certified or licensed site professional?
When considering the type of consultant needed, a determination as to whether the assessment warrants the use of a national or regional environmental consulting firm should be made. Not only does the quality of personnel often increase with the size of the firm, insurance coverage is usually more readily available and the indemnity limits in any proposed contract may be less stringent. For these reasons, it is more likely than not that a national or regional environmental consulting firm will be a necessity in a larger project or transaction.
What Client Information is Available?
Information is often obtainable from company or readily accessible computer databases or files.
Description of Site and Prior Uses
Often, initial information can be gleaned from geographic information systems and database searches which will provide a detailed description of the site and its current and prior uses. Depending on the size and sophistication of the company, this information may be obtained from the company files or through prior or prospective consultants of the company. Having this information before preparing or issuing a request for proposal is usually important.
Narrative Description of Environmental Issues
If possible, the company or any existing consultant should be requested to provide a narrative description of environmental issues. Having this information often reveals certain assumptions concerning the environmental condition of the property which will be important in the selection of a consultant.
A thorough search of company records should be made for all prior assessments no matter how old. A careful reading of the prior assessments will often be helpful in developing the request for proposal.
What Consultant Information is Available?
Often, even before preparing or issuing a request for proposal, it is possible to garner extensive consultant information and make preliminary determinations. The type of information which will be most useful will include a basic firm description, key personnel resumes, client lists, a project description and other general information. Real estate companies and professionals are often deluged with such information and by simply maintaining files for marketing and other information may be able to make initial determinations as to qualifications of the various consulting firms to whom a request for proposal may be sent. For example, a list of sample projects previously conducted by the consultant can be extremely useful in narrowing down the available choices. If, for example, a property to be assessed was formerly used as a plating operation, it would be extremely useful to have a consultant who has conducted prior assessments or closures of plating operations. The resumes of key project personnel are also important; a close review of the resumes of the project personnel will usually indicate the level of technical education and experience, and, as a result allow an initial determination as to whether the firm is qualified to conduct the work. Finally, obtaining a copy of the consultant's standard contract is also a good practice. Often, the level of sophistication and capacity of the consultant is revealed in a cursory review of the form of contract.
Identifying the purposes of and skills required for an environmental assessment as well as what existing information is available is an essential step which should be taken in advance of preparing a request for proposal. Even though the time pressures to complete environmental due diligence may be great, the need to effectively select an environmental consultant is often the critical difference between a complete accurate assessment and something less.